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BP, others banking on Mexico fuel market: Update

07 Mar 2018 17:46 GMT
BP, others banking on Mexico fuel market: Update

Adds comments from other companies.

Houston, 7 March (Argus) — BP plans to make the newly liberalized Mexican fuel market its second biggest in the world, just behind the US, said Doug Sparkman, chief operating officer of North America fuels.

With over 765,000 b/d of gasoline and diesel sales, the country is the sixth biggest fuel retail market in the world, according to IEA's rankings, after US, China, Japan, Russia and Canada.

"We are super excited about Mexico," Sparkman told Argus on the sidelines of the CERAWeek conference in Houston. "The reception we have had from the customers is simply outstanding."

Out of the 220 new fuel stations that BP opened globally in 2017, 130 opened in Mexico. The company plans to grow the Mexico presence to around 1,500 sites by 2021. The London-based company reported a 10pc growth in its fuel division worldwide in 2017. It expects the Mexican market to grow by 10pc over the next five years.

BP has created a special relationship with Mexican consumers that not even politics, like the possible change in polices that could follow the 1 July presidential elections, will remove, he said.

"I am not worried about the election," Sparkman said. "Mexican authorities have created a very strong regulatory framework and we will continue our commitment to the country."

BP's entry into the Mexican market was well-received, with hour-long lines of customers at the stations in Mexico City. In response, local authorities wrote new regulations requiring new fuel stations to submit urban design plans to avoid traffic backups.

Despite its optimism for the Mexico fuel markets, Sparkman said there will be challenges, including the urgent need for new fuel storage and transport infrastructure. Sparkman said BP is seeking partners to build its own infrastructure in the country.

"I can not tell you when [we will invest in our own infrastructure], but it is something that will definitely happen for us," he said.

Other companies expressed similar enthusiasm for Mexico at the conference. Robert Herman, executive vice president for refining at Phillips 66 said the company is analyzing how to participate in Mexico.

One way could be through increasing exports of gasoline as the country looks to Mexico as the main outlet for excess US production, he said.

Jeremy Weir, chief executive of commodity trading company Trafigura said that Mexico's new energy framework is clearly attracting foreign investment, including their own.

"We are definitely active in Mexico," Weir told Argus after a downstream panel.